Altana Chief Says M&A Appetite Undiminished After Rockwood Deal

Altana AG, the chemical-maker that bought Rockwood Holding Inc. (ROC)’s clay-additives unit last year for $635 million, will achieve half of its target of doubling sales by the end of the decade via acquisitions, according to Chief Executive Officer Matthias Wolfgruber.

“We still have lots of firepower,” Wolfgruber said in an interview in the interview in Dusseldorf, Germany, about 35 miles from its Wesel base. The company is prepared to extend its borrowings toward the maximum level that would be acceptable for an investment-grade credit rating, he said.

The Rockwood unit purchase was Altana’s second-biggest and will boost revenue by a “high single-digit” percentage this year, the CEO said. To meet its 3.5 billion-euro ($4.8 billion) sales target, Altana has to add about 875 million euros of revenue with acquisitions, according to Bloomberg calculations.

The CEO declined to give a figure for Altana’s maximum M&A budget. Even after the Rockwood purchase, net debt comes to less than annual earnings before interest, tax, depreciation and amortization. An investment grade rating is usually secure with debt of as much as three times, Wolfgruber said.

Altana is owned by German billionaire Susanne Klatten, who in 2008 paid about 910 million euros in cash for the remainder of the business she didn’t own. The company, which dates back to 1873, would be a candidate for a “strong” investment grade based on its own assessment, spokeswoman Andrea Neumann said.

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The goal is to become the biggest manufacturer by sales and market share in the relevant segments, the CEO said.

“We have to choose businesses in which we can take on a leading role,” Wolfgruber said. “When you are the No. 1 then you have the best people or more people with certain competencies. It’s not about who has the biggest factories, but about who has the best people and the most knowledge.”

Three of Altana’s four business units are already the leaders in their markets, Wolfgruber said. Only Actega, which makes coatings and sealants, has some areas that it needs to augment and the company is still looking for targets there, including in medical technology, printing and packaging, the CEO said.

The Eckart business unit is “by far” the biggest metallic-effect pigment maker in the world, Wolfgruber said. Byk is the market leader in higher-grade additives and Elantas is the biggest producer of electrical-insulation products, the CEO said.

Altana, which posted an operating profit margin of 19 percent last year, expects profitability to remain in the range of 18 percent to 20 percent this year, the company said.

“We’re not a company that does the next big thing but we do lots of little things and that is reflected in our growth and our margin,” Wolfgruber said.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel, Robert Valpuesta

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